The U.S. electricity grid, the sprawling network that delivers power to our homes and businesses, is changing rapidly – a point few experts will debate. But how policies should guide the future of the grid – and specifically which fuel sources should be used – is a highly contentious question.

Department of Energy Secretary Rick Perry in April asked DOE staff to prepare a study, which was released on August 24, to assess the electricity markets and its reliability. News of the review caused great trepidation among solar and wind advocates because Perry had singled out the importance of nuclear and coal – a favorite of President Trump – in maintaining grid reliability.

In the end, the study said the sharp decline in natural gas prices over the past decade is the primary reason coal has become less economic, rather than the spread of wind and solar. The report also found that wind and solar, which provide power intermittently, have not caused any insurmountable problems in the grid’s functioning – yet.

Lessons from Texas

Reactions to the report’s release have been mixed, and it’s not clear what policies might follow from it. But academics have written extensively about the dramatic changes happening behind the scenes on the grid. Most notably, four energy experts from the University of Texas looked at what happened when wind energy surged on the Texas grid, known as ERCOT – much of it during Perry’s time as governor.

Wind power did not crash the Texas grid because the state reformed how it operates its wholesale energy markets, they said. Yes, grid operators need to rely more on natural gas plants to compensate for varying wind and solar, but the wholesale price for energy has gone down. They wrote:

“Research at UT Austin shows that while installing significant amounts of solar power would increase annual grid management costs by $10 million in ERCOT, it would reduce annual wholesale electricity costs by $900 million. The result of all this is that renewables compete with conventional sources of power, but they do not displace nearly as much coal as cheap natural gas. In fact, cheap gas displaces, on average, more than twice as much coal than renewables have in ERCOT.”

Texas had to learn how to deal with the surge in wind energy, but it’s lowered prices and brought more low-carbon energy onto the state’s power grid.Daxis, CC BY-ND

Nuclear power plant operators cheered the DOE’s report because it noted the crucial role of nuclear in the current grid and recommended faster reviews for new plant construction. But should the federal government provide subsidies, as New York has done in one case, to keep nuclear power plants in operation?

“Subsidizing carbon-free sources is justifiable to provide for the future greater good of the country because they provide climate change and clean air benefits. Perversely, however, the U.S. Environmental Protection Agency and most states have declined to consider rewarding the same benefits from existing nuclear power plants.”

On the other hand, Peter Bradford from the Vermont Law School and a former Nuclear Regulatory Commission member said that nuclear has always struggled to be economic, and policies to favor nuclear will cost consumers. He wrote,

“Nuclear power producers want government-mandated long-term contracts or other mechanisms that require customers to buy power from their troubled units at prices far higher than they would pay otherwise. Providing such open-ended support will negate several major energy trends that currently benefit customers and the environment.”

Careful planning

The stated rationale behind the study was that the U.S. grid needs to ensure it has “baseload” power sources that can operate around the clock, as nuclear, coal and natural plants can. And the DOE study does note that it’s worth studying what happens with a deeper penetration of solar and wind because they could cause reliability issues in the future.

“Careful planning is needed to ensure that energy storage systems are installed to take over the baseline load duties currently held by natural gas and nuclear power, as renewables and energy efficiency may not be able to carry the burden.”

“This dramatic change has meant tens of thousands of lost coal jobs, raising many difficult social and policy questions for coal communities. But it’s an unequivocal benefit for the local and global environment. The question now is whether the trend will continue in the U.S. and, more importantly, in fast-growing economies around the world.”